UNITED NATIONS/WASHINGTON (Reuters) – U.N. chief Antonio Guterres called on Thursday for debt relief to be offered to all developing and middle-income countries amid the coronavirus pandemic and urged the International Monetary Fund to consider boosting global liquidity by issuing a new allocation of its Special Drawing Rights currency.
“Alleviating crushing debt cannot be limited to the Least Developed Countries,” Guterres told a U.N. meeting on the pandemic’s economic fallout. “It must be extended to all developing and middle-income countries that request forbearance as they lose access to financial markets.”
The world’s developing economies – already struggling with a growing debt burden – must now confront a record global downturn, plummeting prices for oil and commodities exports and weakening currencies.
“Many developing and middle-income countries are highly vulnerable and already in debt distress — or will soon become so, due to the global recession,” Guterres said.
The Group of 20 major economies, including China, in April offered to suspend bilateral debt payments by the 77 poorest countries for the rest of 2020.
World Bank President David Malpass said about half the eligible countries were participating, but longer-term debt relief was needed and many would need a permanent and significant debt reduction.
African Union special envoy Tidjane Thiam echoed those concerns and urged a debt standstill of two years.
German Chancellor Angela Merkel backed Guterres’ call for the IMF to consider an increased SDR allocation.
IMF Managing Director Kristalina Georgieva proposed a new SDR allocation – akin to a central bank printing new money – at the start of the crisis, but the proposal has been blocked by the United States, the largest single IMF shareholder.
After the U.N. meeting co-hosted by Canada, Jamaica and the United Nations, Canadian Prime Minister Justin Trudeau told reporters: “We cannot just simply look to ourselves and hope everyone does better on their own.”
(Reporting by Michelle Nichols in New York and Andrea Shalal in Washington; Editing by Bernadette Baum and Grant McCool)